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Feb. 25, 2022

EP 125: Firefighter To Multifamily With Seth Teagle


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Transcript
so we're here with uh seth teague out of
ohio he is a multi-family investor in
syndicator i also have my co-host here
frank spaulding uh we're gonna have a
great conversation here stuff i want to
know we're going to get questions for so
i'm excited about this one so uh seth
can you tell us about uh what you've
done i always ask this because i like
kind of laying the groundwork because
when you talk multifamily people like oh
you're in the clouds like let's kind of
bring it down to reality so how did you
get like what did what did you do in the
past with a construction worker
like like where where did you start at
it yeah
my story is pretty interesting because
i'm like a general like i'm like
in reality i'm like i'm an undercover
blue collar guy right that i've actually
been a fireman for 21 years i'm still
actively serving in that role i'm
probably
uh you know i don't know how much longer
i'll do it for but my main partner in
the stream group and i are both firemen
that's how we met that's how we kind of
got
started together and we kind of when we
met we were like man we should team up
together but prior to that i was
you know i lived i grew up in north
dakota and lived there for most of my
life and then i moved to florida in 2000
and was there for about eight years met
my wife
um got in the fire service there and
then her dad lived in columbus ohio and
i was kind of like after working two or
three hurricanes i was like man this is
this is crazy hurricane katrina
hurricane ivan like just watching all
this death and destruction i was like i
don't really know that i i think i want
to be a visitor not like a permanent
resident down here so
uh we opted to leave in 2008 yeah right
when the market was crashing and all the
craziness was happening and and moved to
ohio and um
that was it i was a like i said fireman
for all that time and still am probably
about seven years ago i realized that
you know i was working tons and tons of
hours and to the point where i just
couldn't work anymore and make any more
money and i thought what you know what
what else can i do and there has to be
something better
uh for me than just just working my
regular shift in overtime or having like
two or three jobs and so
uh you know i
got into real estate through a friend of
mine who i knew in college and he'd be
like blown up become this huge investor
harmony lender has a pretty big
following and
um you know he kind of got the fire lit
underneath me to get into real estate
and
through some different things that
happened along the way i i got into
multi-family and been going hard at it
ever since
that is amazing firefighter
congratulations appreciate your service
thank you absolutely is amazing that is
amazing you're the first firefighter
we've ever interviewed that's awesome
so
tell me uh and then here's the other
people i like i like bringing it down
because people like how do you get in
the multi-family like did you start
doing wholesale do you start doing
houses like how did you just about to
ask that what was the first deal
yeah so my first deal was the 50 unit
which sounds crazy right that like what
are you you you did what now this is
what i usually get like from people
and so for me like
i realized that uh that
real estate could lead to generational
wealth or passive income or you know all
these things that we hear about and i
was like that sounds great like my why
is always my family i've got three kids
i'm married you know the divorce rate
for america is like 50 but it's even
worse for people that are like firemen
cops military you know people in the
healthcare industry hospitals all the
time it's just those jobs are very hard
on relationships and so i was you know
it's always been a
super important thing for me to have a
great family life and have a great
family life for my kids and so you know
when i realized when you start having
kids i'm like man you know with
inflation going up you know like the
money i made last year is not enough
this year and like all these different
things i'm like what do i do and so
like i told you i said i reconnected
with that guy
uh which he kind of got me started uh
really kind of looking into real estate
and then i was doing i spent a couple
years like reading and researching and
and kind of just getting my uh my feet
wet and like what does this really look
like because one thing that he told me
in the very beginning was you know if
you're going to get into it like your
first deal has got to be a home run or
it's got to be
it's got to be good you just can't have
it go bad because if it goes bad you're
pretty much done
um and so i i really think that the
heart so i wanted to kind of like
really kind of just sharpen my tools and
and be ready to go into whatever it
looked like
and then i met a guy here locally that
was a house flipper and i was like man
like this is the first person i've ever
met in real life that's doing this like
let me
let me talk to you like let me know let
me take you to lunch let me buy a drink
or whatever and
when i when i went and talked with him
what i heard was that he was struggling
with finding good project managers for
his flips and finding uh he was not
finding very good property managers and
so i was like look i'll work for free
like i don't care i just want to get my
on-the-job training i want to learn like
i got a ton of questions like but i knew
with my background the fire service i
knew construction i knew how to manage
contractors and kind of like run teams
and so i knew that i could do that i
just needed something to give me a
chance and so for a year i worked for
him uh basically for free
doing those things and kind of getting
getting my feet wet and what i learned
or realized kind of in that year was for
at the time i thought i'll be a fireman
forever i'll have some rentals this will
be great
but i realized like running all over
town and going to these different houses
and watching the flips happen and every
house needed some different flooring and
different finishes and different
vanities and all you know it was very
logistically um
it's just it was just tough it just
required a ton of time a ton of manpower
to try to do these things and and for me
trying to maintain a career i was like i
need to find the thing what's the most
efficient uh thing that i can get into
and all i had heard was you know over
the top over the years was multi-family
like 10 units under one roof and one
location was much more efficient than
having 10 houses spread out over a whole
city and you know i mean that i bought
into that because i'm like look that's
at the time that's my goal right is to
just get it just have enough to
kind of make up the difference or the
shortfalls
and then like i said i i had the
opportunity to um
basically what i decided i was like look
i want to i want to take the the
knowledge i have the money that i've
saved and i want to go find the biggest
thing that i can buy and i went to
another investor and i said hey pull
let's pull the equity out of the houses
that you have let's pool our resources
and let's go find this thing and
we went out to a smaller market outside
of columbus and we found a 50 unit that
was a
true value-add property is probably
more value-add than i should have bought
a bit off of my first deal but you know
like i said i was ready for it and my
schedule at the firehouse is um 24 hours
on and we have two days off so i had a
lot of time to
uh give towards kind of running the
property and that's that's what i ended
up doing so you know we bought it and
that was the first deal
that is amazing
first deal so that's what you were
self-managing also correct so what i'd
so i i
i bought and i thought look i can do two
things that i i knew i knew i was good
at construction management i didn't know
how good i was going to be at leasing
and managing something of that size i
had done leasing and managing on a
smaller scale the guy that i was
managing he probably had like 15 units
and so i thought well i can do i can't
do both good i can do one of them good
let's so what i did is i brought in a
third party manager down there i went
down there and met with several
and basically presented my business plan
and i'm like look here's what i want to
do and
i went with the one that i felt was most
aligned with my interest and
i was there every day i was at the
firehouse managing that rental as far as
the construction goes and doing the
renovations
but i was it also gave me like the
on-site presence to know whether or not
they were actually managing my property
well and then if we were having you know
troubled tenants or there's problems
like i was there to report them and
really kind of like light the fire
underneath them to make sure they were
doing their job and and i think that you
know had i not been there it could have
been a different story but because i was
there putting the time in uh you know it
worked out
outstanding
so
tell me it looked like you had a
question daniel no no no i was waiting
for you to ask a question so
50 units so i know what i noticed a lot
about multifamily is that people do
different like different jobs when it
comes to family because there's so many
different things that need to come
together for the deal
what part are you in most of these
transactions
so i would say like the biggest role
that i have right now and like in our in
our company is finding the deals so i do
a lot of networking a lot of broker
relations um
you know i will do
i probably specialize in kind of like
being the face of the company and then i
do a lot of back of the napkin kind of
like you know hey like they'll send me
the deal and i'm like yeah we like the
area yep it fits the box of stuff that
we're looking for yep the financials
look good that rent roll looks like
those rents look low you know i know the
market where i'll do the market research
and be like yeah i think that you know
the rents should be this this is what
they're showing you know and i kind of
established like like this look looks
like it fits in our criteria then i send
it to tim shaw who's my main partner at
the stream group and he kind of does
like the deep dive right because he he
will do more of the deep underwriting
and really kind of get granular with
things and then we'll circle back to
each other and say here's what he found
here's what i'm thinking you know and so
we each kind of have our rules he's not
the he's like one of the smartest guys
i've ever met which is why when i met
him i'm like let's team up right because
he plugged a lot of the holes that i had
and i plugged a lot of the holes that he
has so it really worked out well for us
uh and i'm i'm not the guy it's very
hard for me to sit down and sit in front
of a spreadsheet for like three or four
hours crunch numbers like i it's like
torture to me
but he can't get on and talk to you guys
right he's like super shy and
introverted and wants nothing to do with
that he likes kind of being the guy in
the background uh he always likes to say
that that i catch him and then he cleans
them you know so that's that's kind of a
running joke with the two of us but uh
you know that's that's probably my
biggest role and then i run i do a lot
of the day-to-day operations i manage i
manage the manager that we have like
we're vertically integrated now so
um i think that you know that's probably
a big role that i have is again i still
have my hand in the construction you
know we do everything in-house now so
it's like are they staying on task like
i'll walk units and i'll i'll kind of
like we'll take like we buy a place
we're like okay this first unit's like a
test unit and i'll go there and i'll say
you know we want to do this with the
flooring this with the walls listen i
kind of set up the scope of work and
then i monitor them as they kind of do
the first one and then once we know that
everybody understands the standard and
what our expectations are then we pass
it off to our construction manager
project property manager team and then
they kind of go from there and then i
just do like i check in with them on a
regular basis or i'll go to you know i
kind of i'll show up and walk units or
i'll go there and you know hey you know
we'll look at the rent roll we're like
hey this is you know this would take a
little bit longer than we thought like
what so that's a lot of stuff that i do
like kind of like behind the scenes
okay
so now the the first one did you all
finance that yourselves or did you
jump straight into trying to find
investors
you know
becoming an asset manager yeah so it was
uh the first the first 50 unit was just
me and one other guy we threw our own
money in we had enough
we had enough to buy the property and
about 50 000 left over and that was it
and i thought that was enough right so
you don't know what you don't know
getting into your first deal which is
why i always tell people like you know
now that was kind of before like i knew
i didn't even know about podcasts i
didn't know that you know there wasn't a
ton of facebook groups there wasn't like
there was probably stuff stuff on
youtube but i just didn't know i wasn't
in the room with all the multi-family
people it was still kind of like i was
picking up bits and pieces from bigger
pockets and
other you know anything that i could
find and so
you know i didn't realize uh
you know like i had never heard of
economic vacancy right where we pulled
the leases and the leases are saying
this
and they're saying this on the rent roll
looks great and then when we actually
took over i realized that they were
making like half of what they were
actually saying they were uh and and
then they we had what they had like four
units i think were vacant when we bought
it and within the first payout the first
month we had 12 more people leave just
in the middle of the night i had never
heard of that i had no idea that that
was even something that could happen you
know and so
i called a guy in cleveland um who was
also a firefighter one time that had
left because he got so big in
multifamily and i was like
what do i do and he's like man you
you're like way under capitalized he's
like the first thing you need to do is
uh go out and raise some money so i
was able to through friends and family
was able to raise about two and a half
two what 250 000
and that is what we ended up using to
basically renovate the complex and again
i did a lot of sweat equity you know in
my career previous to multi-family i
knew how to do drywall i knew how to do
windows i knew how to do
all this work so
you know it's
it was a successful deal because of my
background i would highly suggest other
people not doing that i would say you
know get a mentor or get get hitched to
somebody that's already doing it and let
them help guide you through the mine
field that could be your first deal
right because like i said
on a single family flip and you do it
wrong you might lose 10 20 000 on a big
multi-family property if you buy it and
then you don't
know what you're doing and it starts to
nose dive they're very hard to like pull
out from that spiral and now you're
talking hundreds of thousands of dollars
or millions of dollars in it and in most
cases other people's money that you're
tying up as well so that's it becomes a
lot bigger of a responsibility
that's that's amazing good
definitely uh well you touched on one of
the things i was going to ask you know
mentorship
you know did you
you know go out and trail by fire learn
how to raise funds
after that first 50 unit or did you go
out and find a mentor who had that
experience already
and yeah yeah that's kind of a big jump
to go from yeah so it's 50 units for 47
million
yeah so we went we went so the first
deal i did you know like i said it was
just two of us and the second deal was
kind of the same thing we we refined
that first deal in
i think around 14 months and we pulled
out a million in equity so it went very
very well which i was hooked i'm like
this is it like how awesome is this like
that's more money that i'm gonna make in
like 10 years you know in one deal like
this is awesome uh and so we paid
everybody back that we borrowed money
from and we had about a half a million
left over and we're like let's do it
again so we wouldn't bought a 40 unit
from the same seller nearby and we were
like let's just do it well through that
one again that one was much easier
because now i knew what bridge debt was
i knew how to like structure it better
and finance it better and and and get a
loan that has the the construction piece
added into it where my first one didn't
it was just a straight like traditional
like local bank financing uh and so that
one went good but what i realized was
like man if i want to keep doing this
i'm gonna have to
find a way to do it without having all
of my money tied up in all these deals
and so that was really what led me down
the path of syndication and uh you know
it was really like it was trying to get
myself i i didn't i was skeptical of a
lot of the gurus and the mentors that
are out there that are like i've got 6
000 doors or i did this 20 years ago i
knew i was super successful and you know
like i'm i'm always leery of that right
because there's so much bad information
out there like how do you differentiate
the good from the bad and so for me it
was like people that i knew i kind of
clung to them and so i had a couple of
you know friends or people i met through
networking that had sizable portfolios
and i was just i mean i would do
anything to get time with them and and
have them teach me and through that they
connected me with some other people that
you know just helped me learn
uh and so again you know i that's how i
did it i think that you know if you can
find a great mentor that's legit
um you know there's several of them out
there now that i've realized over the
years that have helped people go from no
units to
huge successful numbers uh you know it
just really is it's kind of like vetting
i think to me it's vetting the people
that you're paying money to you know
because
it's it was hard for me to
pay somebody twenty thousand dollars for
mentorship for a year when i really like
that was a lot of money to me
you know and that might be you know if
you know for a normal person if you
saved up 20 grand and you're like i want
to get real estate investing like what's
my roi if i give it all to a guy and i
go to a course for a year like you know
it's a hard thing in your brain to
understand that spending that 20 000 in
that group might lead you to
other things you know like it's just a
it's a mindset shift that i hadn't had
you know it took me a while to kind of
understand that
um one of the things i really want to
hit on because a lot of people
a lot of people uh don't know this
but uh you said that you had a bunch of
units like vacate within the first few
weeks
um
now you know you didn't establish
yeah yeah well now we factor that all in
right so now we do we do a friend's
house everything we do we do all kinds
of stuff to try to like combat that but
now it's expected right when you're my
first deal i mean it scared me to death
i'm like what are you doing all these
people left like what and are we you
know are we going to catch them up and
pay the mortgage like what am i going to
do and my wife's going to kill me and
we're going to you know all the bad
things i imagine but now it's like it's
expected when we go in you know
depending on the type of property right
if we're buying a b plus or b asset you
know you don't really see that but if
we're buying something c or middle c and
we know that we're gonna have to put
some work in like
you know we had it we bought a 40 unit
last year and we took it down here he
was 96 percent occupied we took it down
to eight people living there because we
and we knew going in that that's how we
like that was the plan though is that in
order to change the rebrand the whole
place and take it from like it was in a
great location but he was running it
like a crack house
you know it was like the location was
great so let's go find the biggest dump
on the block
and
just you know we will we'll win big on
that right but the risk is right
everybody had everybody that we had
three investors on that deal everybody
has to understand that you know
the here's we're gonna nosedive this
thing but then we're going to take you
know we're going to pull out at the end
and we're going to we're going to save
this thing and it's going to be great
and that's what we did i mean we've i
think we've had it for nine months and
we've renovated 38 of the 40 units and
moved people around and we kept the
tenants that were good that were paying
and got rid of everybody else and i mean
it's just been a great project but you
know
what is the turnaround time because i
mean renovating 38 out of the 40 units
that's crazy
that's crazy
you really didn't take it by that one
imagine that somewhat depends on the
scope of the renovation too yeah i mean
so we're not you know so a lot of stuff
you know we're doing cabinets we're
doing flooring we're doing toilets
vanities you know we're doing tubs we're
doing surrounds we're doing windows
we're doing you know like that kind of
stuff but you know we really try not to
get into the walls if we don't have to
because when you start getting into the
wall i mean lord knows what kind of
plumbing and crazy things you might find
and so we try to you know especially in
ohio like once you get into the walls
you technically have to call the
building department and and you can sort
of open yourselves up to other things
with the building code that you have to
you know bring things up to the 2022
code where if it was built in 1970
you know as long as you don't touch the
walls you don't have to you know rewire
the whole thing but if you go in and
you've got the whole building down to
the studs you can believe you're gonna
have to bring it up to the new code so
you know just it's being tactical with
it i mean we're not you know i don't
think we're doing anything different
than you know we're not like again we
you know we renovate to the area that
we're doing it in you know if we're i'm
not putting granite countertops in every
apartment you know there's guys that's
all they do grant and everything well
you know if the people you're going to
rent to
you know if you're getting 100 rent bump
and it makes the deal work for you but
the people you're still going to rent to
aren't going to appreciate granted like
i don't see that i don't see the benefit
of the cost you know like if now if i
can put granite in and i know i'm gonna
get an extra 75 bucks a month at 50
bucks a month in rent well sure then it
makes sense to spend the extra money but
you know it's just understanding your
market and the building you're buying
and you know all those kinds of things
but
we have a whole team that i mean and it
hasn't gone without growing pains and we
have a team that we use that does a lot
of our construction in-house but we
brought it in-house because of all the
bad experiences we had with outside
contractors or outside construction
groups that you know that we had to fire
in the middle of a project like for
instance we've had one where the guy
came in and gave us quotes we based all
of our capex money based on the quote
that he gave us we had a couple two or
three but we was the one we picked
and then like three months into the deal
we had to fire him well now we bring in
you know the next contractor but his
pricing is more realistic and it's
10 you know i would say 10 000 it's
probably 5 000 or more unit well if
you've only budgeted let's say half a
million dollars and now the
the the new way the only way to get this
done is real the real number is 700 000
what do you do
you know and how do you navigate that
and so that's really for us is like
that's one of the things i think that is
the biggest
can be a big problem that causes people
to
the deals get out of control is
when they don't estimate the capex
properly and then they get into a deal
that maybe they either a should have
never gotten into
or they weren't didn't have enough
reserves and that's like i said then
you're in you're either having to do a
capital call or in which the investors
could say no
you know we're not giving you any more
money that is what it is then how are
you going to figure out you know how to
still make this a win for you and the
people that put you know they trusted
you to you they gave their money to you
so i want to i kind of want to break
things down a little bit because
i know a lot of people don't understand
multifamily so let's kind of
why would
why would somebody
invest into granite countertops to get
some extra 75
uh kind of explain like the
amplification of multi-family a little
bit yeah so the well i guess the first
thing i'd say is a lot of people do
granite because it's the durability of
it like it's kind of like you always
want to be considered hardening the unit
so you want okay like like the hardest
surface floors the highest mill rating
of like floors you can find the granite
people will do the the like the cabinets
even that we buy we don't buy like the
cheap cabinets we buy you know granite
or cabinets that are like full plywood
drawers the box everything is like built
strong because tenants are gonna be
they're
just the life is extended and so you
wanna you wanna do these purchases once
and then when you before you sell it you
want to like you don't want to have to
come back in and re-renovate before you
sell so you want to harden it as best
you can on the initial investment of
renovations and so um the important
thing with any of the renovations that
you do in multi-family and use broad
granite is
if you can get an extra 75 a month in
rent you know let's say you have we'll
just use a 10 unit for easy numbers and
it's it's 750 more by doing that right
750 more a month so that's what we'll
just say
9 500 bucks somewhere in that range um a
year well in multi-family anything about
four units you're in commercial real
estate and so the noi or the net
operating income divided by the cap rate
of that area can kind of give you a
rough idea what that value of that
property will be and so when we buy a
property we look at what it's valued at
now and then what do we have to do to
get the rents 50 100 200 or more and
then we'll know like if we do these
things we get to that what do we think
the value will be at the end and that's
what how we evaluate our deals like yeah
we you know
the mom-and-pop owner he's owned it for
15 years he's appreciated it out he's
had rents 200 below market because for
him
he was like you know i bought it low you
know he wants to keep the rents low and
full i see that a lot well we want to
come in and we want to change out that
whole tenant base and
you know we want to make the money
that's what we're here for and so that's
what that's every decision we make is
all based on you know is the return on
the investment or the return and the
rent can we get the rent bump enough
to make the money we're going to spend
on that whether it's granted or the
flooring or the cabinet's like can we
you know is is the return there and if
it is we spend the money if it's not or
it's questionable then we either do more
research or
you know we may hold off on it
and i'm also going to guess
your part of what you're doing is to you
know cut the cost of the turnovers
in the process so you know the way that
we do now is like when you
if you harden the unit or you do it the
way a lot of the guys that do the these
bigger deals the way they do it is you
know like now like once i'm done with
the unit and when somebody lives in it
they might live in for a year two years
you know again it comes down to your
management right we do quarterly
inspections you know we catch the people
that are like living in filth way before
it's like nobody like if you don't walk
into your unit for two years and you
wonder what you go in people got roaches
and bed bugs and
cat urine and dog poop all over the
place like that's on you is in the way i
look at it like you need to be
inspecting those things regularly to
catch it early but if you do it right
you should be able to send a cleaning
lady in there and kind of do you know
you might have to do some light touch up
some paint you know whatever but you
know you should be able to actually move
it on monday and have something new in
there on friday if you do it right and
that's really like i said where you
start building up steam and you use you
know you're you're constantly making
money so your downtime is much less
wow
that's that's really good because man
the turnover doing turnovers and not
keeping an eye on it i inspect i never
heard that before inspections either i'm
new like i said i know a lot of
information but i never bought this
multi-family so it's really interesting
hearing that
um
turnover
turnover and so you do you do quarterly
inspections you said quarterly yeah so
we managed to in central ohio we manage
about 90 of the units that we own and
that is one thing that we do every
quarter we send our our manager or
somebody from the staff they go around
they schedule the inspections and they
go through they walk the unit because
that's just part of our you know we just
come as part of our maintenance plan or
whatever but i mean it's you know and a
lot of guys will do like if you have
central heat and air they will provide
the furnace filters to the tenants but
they have to install them and so they
have their maintenance guy go in there
every month to install the furnace
filter but they're also like getting
eyes on the property and like i said
catching somebody early that has it you
know like people love the sneak pets in
well you know if you live in our
property you're paying you know you're
not in front of a pet fee you pay your
pet rent every month and if we catch
that you're getting dinged you know i
mean because again it all comes back to
making the property make more money
every year
net and that's where the value comes
from so when because the whole gist of
like the stuff that we do is we buy it
we renovate it or we do have the value
add and that might just be a different
management practice and then when we
refinance it into long-term fixed debt
we want the highest evaluation so we can
get everybody their money back out
so you know it's really important to
kind of be dialed in on those things
uh and if you miss them you're just
leaving money on the table when you refi
man that was a good one i like that
that that event thing or the the filter
thing that is that is gold right there
because i'm like how do you how do you
get that in there but that that was a
good one right there yeah
it's just we have it in our lease too
like so like if there's you know we have
some units that are through the wall uh
heating and cooling like they you know
and so we don't have furnace filters so
just it's cooked into the lease like
every you know they when they
rent from us they initial next to hey
you're gonna get quarterly inspections
every three months you're gonna expect
that our property manager or somebody
from our staff is gonna walk through
your unit it takes five minutes but the
other thing that you catch is you know
getting a property where you're paying
for water you know like um some of our
stuff some of the stuff that we own like
everybody wants to do rubs if you've
ever heard of that or kind of like
buildback utilities but some properties
you just can't do that like it doesn't
make sense it's the way it's metered or
the way the municipality reads the
meters or you know whatever so we'll
just cook that into the rent
uh you know whatever we what we got to
figure out what that dollar bond is and
we'll cook it into the rent but where it
can kill us is if they have like
dripping faucets where they have tubs
that don't shut off all the way or you
know they have running toilets and you
know and they don't care right they
don't ever call you how are you gonna
know and so that's also what our guys
are looking for when they go through
there is do i hear a toilet running do i
you know i check underneath the sinks to
check for leaks because you know some
people are
you know depending on you know the type
of
um
kind of background they come from
they're scared to call and complain
about i shouldn't say complain they're
called they're they're afraid to call
and tell you about a maintenance issue
because they're afraid that you're not
going to fix it or you're going to want
to kick them out or you know like
they're just i don't know what it is i
mean people are just like they're scared
to report maintenance like when i lived
in apartments when i was in my 20s like
i did i'd call and report it right away
but you know it just depends you know i
don't know some people they don't do it
or like i said their their toilet will
run they'll just let it run and run and
run and run and
that would drive me crazy i have to call
and get you know it fixed but you know
those little stopper valves in those
toilets i mean they they can go bad
every six months so you know if you're
not watching that you can
you can flush hundreds of thousands of
dollars down the drain uh every year if
you're not paying attention to it which
could turn into huge huge
dividends on the end yeah absolutely
definitely
so
you know that that term you know makes
me uh kind of want to jump tracks on the
direction
uh you know show me you know what is one
of your money raises are you doing
syndications uh mix of syndications and
funds uh have you generated a fund and
if so what type of fund yeah so we do
the majority of the stuff we've done up
to this point has been 506 b's we've not
had to really go the 5060 route because
our network has been pretty good and and
we've just gotten everything funded um i
talked to some pretty big players on
like a national level that are i mean
they're they're way bigger than i am but
they're not like reits or big equity
groups right those guys the only one you
know we're
we're not even the same pond as those
that are going to talk to you but you
know the guys are doing some pretty big
stuff you know i've talked to them and
kind of asked them like well how do you
do it and they've actually steered away
from doing 506 c's because they're
handcuffed so much
um with who they can have in the deal
right if you're doing a 506 c you're
only going to have the accredited guys
and and and what i found is that it
really is like you know i don't know if
you've heard the phrase like that people
will bet on the jockey and not the horse
and so
i have found that people really want to
know the operator the sponsor like
that's more important to them than
actually what the deal is going to do
right because most people will say how
much do you need and when will i get my
money back or how long are you going to
hold it for you know and and
a lot of the
deals we've done have just really like
kind of grassroots grown from our
networking and people having a great
experience so they tell their friends
and then those guys tell other friends
and you know we're doing podcasts like
this where people get to kind of hear
they have a chance to kind of get to
know me on a level where it's different
than like just going to my website or
like you know i spam you with an email
right you're just going to delete it so
it's it's totally it's just a different
way of thinking and we've been blessed
enough to
have a great network of people and we've
closed deals right and that all that
stuff helps um when you're trying to
build this business uh so we most of
it's been 506 b's and then we've looked
at doing we almost created a fund last
year
i think this year we're probably going
to do it it's just because we have we
just have deals that come like
like
we'll have nothing and also we'll have
five show up that are like great deals
and we're like well you know if we don't
if we had a fund we could just buy them
right it wouldn't be that big of a deal
but like last year we closed a bunch of
stuff and it was like every one was its
own syndication well
syndications aren't cheap doing the
paperwork and then everyone you know if
you've got one kind of started and then
you know you have another one come up
like you have to kind of like those
people aren't able to technically invest
in that one you know it's a whole like
separate thing and so we found that
might just be easier for us is just to
set up like a c-class central ohio fund
let's say and then anything that comes
to us within central ohio that's a
c-class property we can just buy it
and then the funds is the money is
already sitting there people are getting
a return already from just the portfolio
and you know it again it spreads the
risk out where you're not just in one
deal you might be actually in 10 deals
that are generating the revenue they're
paying your return or paying your money
back and so i think it's kind of a
almost like a little bit safer model but
it's not one that's talked about a ton
uh by syndicators so i don't know it's
something we're looking at doing uh this
year
yeah it's definitely a a big jump but
you know you but you set it though you
get the advantage you can
instead of jumping from deal to deal to
deal and cut you know constantly being
in fundraising mode
you can just you know jump the ldl to
deal with the deal but at all
yeah you have to have properties right
and that's yeah
right these are taking people's money
and you're guaranteeing them an aim for
whatever like you better find some
properties because
otherwise you're just you're losing
quickly
exactly
the mentors have been working with uh
you know it's all about you know raising
the private money and then you know
raising you know creating funds
so moving on from the syndications that
i've done so i understand
yeah
yeah that's great
okay this is this this is a very
interesting conversation because
i've like i said i'm i'm still learning
a lot a lot about a lot of these things
so it's kind of
kind of like i'm i'm the beginner in
this one
so
can you
define capex
what's the definition of capex
um and how does it correlate to like
your
big picture big picture thing whenever
you're acquiring
uh so like i mean without getting like
super in the weeds with the irs and how
they
you know how we view it between
maintenance and capex with the attack
stuff the deferments like that the way
that we view it is anything that is that
we when we go into property anything
that we're going to be replacing
like we know going into it we're gonna
replace it right if you're if you're um
you know whether that's flooring
um
vanities you know all the things like i
mentioned like you're even painting you
know like i mean painting by the irs
standpoint's not really a capex item but
you know flooring vanities cabinets um
appliances all those big ticket items
that you know like i said over you know
if you gotta go in you gotta buy 50 new
refrigerators or appliance packages
you know within the first six months
that's a lot of money that would be
considered a capex thing that you got to
plan for you know or if you're you know
we buy our flooring we buy our lvp by
the shipping container load from china
so i mean you know you're going in and
we know that we're going to do 50 000
square feet of flooring we gotta we got
to have the money set aside for that you
know or you know when we go in and we
buy vanities from you know whatever you
know
like i'll use lowe's for instance we go
and buy low from lowe's we plan with
them
like well in advance like hey here's the
skus we're going to buy here's the but
you know here's what we're going to what
we want and so you know again if you're
buying a vanity for we'll say we again
we buy them in volume so i'll say 150
bucks for a vanity but i'm buying 50
over 100 of them it's a lot of money you
know and so you have to all of those
things have to be kind of accounted for
and that's like i said people can really
go around quickly if they don't account
for
the like if they they get in and they
don't have the price point on you know
they're not on point or they they don't
factor something in like that's really
where i see people go
go wrong on deals is they they're off on
that number and so then you kind of get
mid
renovation and you're out of money and
you're like oh man now what am i going
to do right because
again it only makes sense if you hit
your metric at the end at the refi and
you get people their money out right if
if you told somebody i want you to
invest in my syndication we're buying
this deal i'm gonna keep your money for
18 months in two years and then it ends
up being three years you held their
money i don't think they're grounded
probably invested you the next time and
you know that's
you know that's like i said you got to
be pretty
precision with some of the stuff that
you're doing
wow okay um
that's that was good definition that's
good that's good okay so the next
question i have is we kind of talked
before we came on is that you're you're
now acquiring 160 acres that you're
going to cut out your multi-family part
of it and sell the rest off to investors
and kind of build the multi-family
around that let's kind of talk about
that because that's that's that's
interesting
so one of our partners in the stream
group uh there's three of us and the one
the the third guy tim wacky he's kind of
he's involved like when he wants to be
he's like a he's a big player out in
utah and doing his own thing and he's
he's involved in a lot of our deals but
he's like you know he's kind of like our
big sledgehammer when we find it when we
find something big or we find something
that like just seems to be like a great
deal or you know we're you know we made
a couple offers on some major um
projects last year you know and so he's
involved in those but you know if it's
like a 40 unit he's like hey i don't
know i don't necessarily want to be
involved in that or whatever so he comes
in for the big stuff that's what he
likes uh and so
you know this was uh again a broker that
i have a great relationship with my kids
go to school with his i've known him for
several years he had been working with
some older gentlemen that had this um
property out here in central ohio that's
150 acres um they had been working on
the zoning and
getting the entitlements well they
hadn't started on the entitlements but
working on the zoning for this property
to be
a single family development multi-family
and assisted living and when he was
telling me about this like last summer
i'm like don't you say nothing to
anybody else like i want that property
because i just knew i'm like this is
great it's in my backyard it's in a
great location uh it's just something
that we could do and we've been kind of
toying with the thought of doing
development like i don't want to get
into
being a single family developer but
because this has different chunks and
pieces to it like it was really
something that was great for us because
there's there's like three capital
events that can happen within this one
deal so if you're an investor and you
get in you know the you know you get in
early like let's say you in the first
six months you you're like i don't
invest in this when we sell off the land
to the home and the the home builder
there's a capital event there so you
could get your money back you could go
on to your own thing or you could say
hey i put in this money i just made x
amount of dollars on my equity piece i'm
gonna roll it into the next part and
then at that capital event you know you
can either take your money out or you
can roll it into the third part and for
us the goal is to own the multi-family
chunk of land at 17 acres i think it's
they're allowing like 180 units out that
way
but what's great about it is in the
process of um
kind of working in this deal out and
keeping up with the broker and and just
kind of keeping on him you know being
like kind of at his fingertips you know
like every time i talk to him i bring up
this land like hey man you know what's
the deal with that how's it going like
what's it look like you know are they
ready to tell you you know what's the
story you know you better not be talking
to anybody else and um
and then intel comes out and says hey
we're going to drop this 20 billion
investment in licking county ohio which
is a the neighboring county to columbus
which is one of the county i live in
we're going we're going to build this
this is like the largest plant that
they've built in like the last
40 years it's this huge driver right now
of like i mean facebook's come out here
amazon's come out here and then these
guys are showing up and they're they're
doing this humongous investment in this
area they're they're talking 10 000 jobs
it's gonna bring and just offshoot
um
businesses and things that they they
like so that they're gonna bring to the
area to supply them with what they need
to run their plants and it's like seven
thousand construction jobs are talking
huge huge impact on this you know the
state as a whole but it's literally like
out my front door and then on my back
door is this land so it's really gotten
to be exciting for us where you know i
think that the
the development piece is going to be
you know it could i mean again it's
going to be a life-changing deal you
know if it goes right and everything
goes as we think it will uh
you know it makes it it's going to be
something that's going to be good it's
going to take us to a whole nother level
i think i think what i like about larger
transactions is that
any deal any single one deal could be a
life-changing deal because even your 50
unit changed the trajectory of your life
yeah absolutely
yeah and that's the thing too is that
you know multi-family is great because
you kind of talked about carving up the
deal everybody kind of has a different
role like you could be like let's say
you're a capital raiser or you're um you
know you're really good at finding deals
you know you can go and find five
different deals and do them with five
different groups and get enough equity
between those five deals that just
change your life you know i mean that's
and and you're talking five deals right
i always tell people uh tim brats always
says i think he was the one that
originally coined it but you know
he always says you know like you can
either own like a 100 of a grape or you
can own a chunk of a watermelon and i
just when i first the first time i heard
that i'm like what a great analogy
because that's it right you can you can
own your 10 or 15 single family homes
and like you own 100 of it but you're
also stuck
really having to be the guy that manages
it does all the renovations to it that
does all the maintenance stuff because
you don't you're not big enough to
really employ people to do it and you're
and you're trying to live off the cash
flow having it impact your life so it's
like you're you're skimping on uh you
know you're not going out and buying
flooring by the container load you know
what i mean like that's where for me it
was like that was the jump right and
i see a lot of guys kind of struggle
with that where like they don't want to
give up necessarily the control or
they they've been used to owning 100 of
the deals that they've done and it's
like they
it's i don't know it's something in
their mind where they just can't seem to
like
let go of the fact that like i'm not
going to own all of this or you know
again you do a 5 million dollar deal and
you own 20 of it well i mean you're that
chunk of equity that you have you own is
like how much how many single-family
homes you have to flip or do you have to
rental wise to earn what that chunk is
worth i mean
yeah you know and it just depends
mindset is 100
yeah and it just you know again whatever
your end goal is you know i had my end
goal in mind and i've just
you know been laser focused on it
definitely sounds uh like some
tremendous success there
um i know one question uh i'm gonna cut
daniel's legs out from underneath him on
this one he loves to ask what's your
favorite book right now uh you know what
what book got you started like really
lit that fire
uh and then like what's your current uh
recommended book to anybody yeah so i
would i would say obviously if people i
mean a lot i mean i feel like every
investor has always heard a rich
deadpool ad but you know i always i
always bring it up because you know it
just if you've never uh been exposed to
real estate investing or even the
difference between asset and liability
like that's such a great book that's
changed so many people's lives and
really kind of flipped the switch right
i mean i always i always like to talk
about the movie the matrix where you
know neil's in there and he gets the
option of the pills man and once you for
me i read that book and i was like well
i'm screwed now you know like i
completely unplugged here like this is
this is no fun anymore this regular life
like i gotta go out
and do all this stuff to
to make my life better and obtain that
so i think that was a great book for me
and then another one that was super
impactful that i've read it several
times but i like sharing it anyways
because um it's a book by dan sullivan
called who not how uh if you've never if
people have never read it like again
it's with like you and i have read it
and we're like yeah we know it but like
there's so many people that have never
heard of it and for me being a guy with
a blue collar background who is always
you know being in the fire service we we
fix everything we always have the
solution you know if my even even like i
mean i'll tell you for instance like for
me i stopped cutting my lawn last summer
and that was like the hardest thing for
me because i'm like i
you know i'm so busy during the week
then on the weekends i feel like i'm
like i don't want to cut the grass
anymore like i want to go like let's go
to the pool or let's go to the lake or
let's go do something with the kids like
i want to spend my free time doing the
fun stuff and not slaving away out of my
front yard and like it was like i lost
sleepover because i'm like i felt like
my dad would roll over his grave like
the fact that i'm not cutting my own
grass like what kind of man are you you
know but it's just it's it's talked
about that book where you know if you
really want to scale and you want to
grow like you've got to find the things
that you're good at and then anything
that you're not good at get it off your
plate and give it to other people find
the who like if you know what i said
find the hoot to whatever the how is so
you know like again you need to create a
website can you sit down and spend three
months trying to figure out how to do it
100 percent but you can or you can just
call somebody that does web design and
pay them the money they're asking for to
do it and it's done in two days probably
better than you would have ever been
able to do it or even like podcasting
for instance i know a lot of guys that
you know when they got started they
wanted to um edit and you know kind of
clean up their own stuff and it's like
when elsa and for them they when they
started scaling they're like man i just
you know like some of them do they do
daily podcast you know it's
you have to just record it do the fun
stuff and then just send it off to a guy
that that's what he does and it'll look
better and cleaner a lot of times than
what you and i would even do
yeah anything you can do to buy your
time back is a win you know
i i i laugh at you with the cut the
grass thing because like i had a lot
more and then when i moved like i'm not
cutting aggressive i don't even care
anymore like i have better things to do
in cut grass
i mean like for me the guy comes over
cuts my grass he charged me 30 bucks to
do it i'm like
it takes me an hour and like 20 minutes
to do with my mower he comes over the
zero turn and i'm like dude i'm paying
for 30 bucks i can free up an hour and a
half of my time like what can i do that
hour and a half that's going to generate
more revenue for me or
like i said it could be and he does it
in 20 minutes you guys you know
but he does it in 20 minutes plus he
edges trims
right it looks better than mine you can
put lines in like i can't do that
so i always i like this question too is
uh what is a quote that's yours or
somebody else's that you resonate with
uh i'll keep it simple warren buffett he
says never you know the the i don't know
the exact of it but it's like
the number one rule in investing is
don't lose money
so
there's a lot of times where there might
be things that like i want to do or my
partner want to do and like we always
circle back to that like remember
never lose money like that's the number
one thing right when we're because
sometimes it's hard you know like you
get excited about things or you want to
like oh like you know again it's shiny
object syndrome like entrepreneurs like
you know guys that are you kind of get
like into real estate you're like you're
always kind of chasing the next deal or
that next high of the you know the
return you got or the you know whatever
it may be and it's like there's so many
things that you know i've seen people
try to make money and like maybe they
were super good in multi-family they
thought i'm gonna shoot off and do some
uh some storage units or you know like
for me it's hard because i'll see i'll
see these guys wholesaling contracts for
houses that are in my area and i'm like
man that would be a great flip like i
could do that i would just let me buy it
and then i got my guys go over there
they can fix it up but i can flip it and
i'm like i'm like i have to stop myself
like no that's not what that's not the
focus here you know because it only
takes one deal to
you know like i buy it and then it goes
bad and now it's distracting me and
sucking up all my time and resources and
and then all these other things kind of
go by the wayside and that's
at least for me i always have to remind
myself to not
uh you know not get into the weeds on
these other things and i just like i
said laser focused on multi-family
growing our business
meeting new investors you know just
getting in the room with great people to
work with and you know that's what i i
got to stay focused on all the time
so uh where are you doing
let's let's start off with like how many
deals how many units do you have under
management um what deals are you working
on currently and where can people send
you deals
so we are
like in central ohio we have about 600
doors a little bit over that i think now
and we
manage probably 90 of that i've got some
stuff that i like that i've
i've given off to a third-party manager
that i'm really good friends with and i
know and like and trust him and he's 100
like in line with my vision and so he
runs it the way that i
want it to be ran and it's been
phenomenal so that's we let him run that
stuff but the rest of it's all ran
in-house by our management team uh and
then we have
some equity holdings in multiple
different states uh and that's the whole
stuff that basically like it's operators
that we you know something within our
team knew and we either you know sign on
the debt or we invested with them or we
you know we got on the general
partnership side because maybe it was
their first deal or you know whatever
the case may be the deal was bigger than
they could do so they they had one of us
come in on it um you know and so we we
kind of have that going on but most of
the stuff that we really try to take
down is here in central ohio that we you
know that i i don't go outside of my
my backyard basically like i just
haven't had to right we live in a great
area a great market columbus is super
hot um the surrounding areas are doing
nothing but getting better and thriving
because columbus is doing so well the
housing market for the housing shortage
in central ohio was crazy so i mean all
these areas that you know two three four
years ago maybe nobody was buying in
it's you find like people are being
pushed out that covet is really helped
too because people are working from home
they're able to live farther away from
the metro area they can make great metro
area money but live an hour away because
they don't have to travel to the office
every day so we're seeing a lot of cool
things and i i think kind of like for me
it was like you know the
the lake or the pond that i'm in i would
rather go super deep in that than go
like super wide you know there's some
people you have to right if you live in
new york city you have no option but to
go outside of your area to buy
but for me
i don't have to do that right so we're
doing great here and that's what we like
and you know really like our kind of
sphere of influence is an hour from
columbus so we could go to cleveland
it's a little bit farther away but
dayton cincinnati i've looked at you
know but really anything in between and
then if there's other operators that
like you know they want to just they
want that comfort or that person to sign
on it or the deal with them to kind of
help get them through their first one or
second one or whatever like that's
really what we specialize in
that's awesome man that is awesome so
how you'll sense
how can people send you deals
uh so they can go on our website it's uh
www.thestreamgroups
it's plural.com and then on there
there's like a kind of like a
questionnaire thing where if you're an
investor or you're just somebody that
wants to get in contact with me that you
can fill it out it comes to my email and
then usually i'll like i said i'll
follow up usually within 24 hours uh and
then we'll set up a time to chat or
whatnot and you know that's that's
probably the best way i'm on facebook
just seth teagle you look me up on their
linkedin or instagram you know we're on
any of that those kinds of platforms and
so they can people message me all the
time on that stuff and
and we start conversations that way and
then kind of go from there
well um this that's great man i was
about to ask you where people find you
really go on facebook so let's do it
we're good covered it covered it well we
appreciate your time stuff i think it
was a great conversation we covered a
lot
covered a lot i appreciate uh frank for
helping me out here and uh thanks for
coming on i hope we uh they will send
you a deal down the line yeah absolutely
thank you very much
all right you have a great day thanks
for coming have a great week yup you too
thanks